EUR/USD unable to recover, consolidates near daily lows

The EUR/USD pair fell to its lowest level since April 28 at 1.0863 in the NA session as the greenback was able to build on its recent upsurge, pushing the US Dollar Index to its highest since the bearish weekly opening gap witnessed two weeks ago. Unable to make a meaningful recovery in the remainder of the session, the pair is now trading at 1.0875, losing 0.45% on the day.

The US Dollar Index rose to 99.57 on Tuesday and filled a portion of the gap that occurred following the first round of the French presidential election on April 23. This gap would be filled completely if the index rises to 99.88. As the increasing odds of a Fed rate hike in June continues to keep the demand high for the greenback, the selling pressure on the pair is likely to persist in the next couple of days. The fact that the economic calendar won't be featuring any data that could potentially impact the price action further supports that view.

Furthermore, today's Fed speakers seemed to adopt a hawkish tone and allowed the greenback to hold on to its gains against its major rivals. The only relevant event for the pair on Wednesday will be the ECB President Draghi's speech in the European session.

• FED's Rosengren: U.S. unemployment drop below 4 pct would overheat economy, prompt higher rates
• Fed's George: Falling jobless rate means adjusting monetary policy is of 'paramount importance'

Technical outlook

With a break below 1.0860 (20-DMA), the pair could aim for 1.0770 (200-DMA) and 1.0705 (100-DMA). To the upside, the initial hurdle is seen at 1.0935 (daily high) ahead of 1.10 (psychological level) and 1.1020 (May 8 high).

• EUR/USD near term outlook appears deteriorated – Commerzbank